466 P.3d 325
Cal.2020Background:
- Delta Air Lines (Delaware corp., based in Georgia) employs flight attendants who are based in various states; plaintiffs include both California-based and out-of-state–based attendants who worked flights to/from California.
- Plaintiffs sued in federal court alleging: (1) failure to provide California-compliant wage statements under Lab. Code §226; (2) failure to pay wages on the semimonthly schedule required by Lab. Code §204; and (3) minimum-wage violations for hours worked in California due to Delta’s multi-formula, per-rotation pay scheme.
- The district court granted summary judgment to Delta on minimum-wage and on §§204/226 jurisdictional grounds, applying a multifactor test and finding plaintiffs worked only episodically in California.
- The Ninth Circuit certified three questions to the California Supreme Court about the geographic reach of §§204 and 226, the reach of California minimum-wage law to episodic on‑ground work in California, and whether the Armenta/Gonzalez “no‑borrowing” rule applies to Delta’s pay formulas.
- The California Supreme Court held that §§226 and 204 apply only when California is an employee’s principal place of work (or base of operations for interstate transportation workers); it also affirmed the no‑borrowing principle but found Delta’s rotation-based pay scheme compliant with California minimum‑wage protections and did not resolve the geographic scope of the minimum‑wage law.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do §§226 (wage statements) apply to out-of-state–based employees who work in CA episodically? | Oman: §226 should require CA-compliant statements for the fraction of hours worked on the ground in CA. | Delta: §226 should not apply unless employee is based in CA or works primarily in CA. | §226 applies only when California is the employee’s principal place of work (majority of time) or the employee’s base of work operations for interstate workers; episodic in‑state work by non‑based employees does not trigger §226. |
| Does §204 (timing of wage payments) apply to pay periods in which an employee works only episodically in CA? | Oman: §204 should govern timing for the wages attributable to the hours worked in CA. | Delta: §204 should be limited like §226; it should not govern pay periods dominated by out‑of‑state work. | §204 is subject to the same limits as §226; it applies only to pay periods when the employee predominantly works in California. |
| Does California minimum‑wage law apply to on‑ground hours in CA for episodic workers? | Oman: CA minimum wage applies to all hours worked in CA, including brief on‑ground time. | Delta: argued limited geographic reach or that its scheme complied regardless. | Court declined to decide the geographic reach question; instead held that even if CA law applied, Delta’s pay scheme meets minimum‑wage requirements. |
| Does the Armenta/Gonzalez no‑borrowing rule make Delta’s rotation pay unlawful? | Oman: One of Delta’s formulas pays only flight time, leaving ground hours uncompensated, effectively borrowing from higher‑paid hours. | Delta: Pay is by rotation (not per hour); four formulas guarantee pay at or above minimum wage for each rotation/duty period, so no unlawful borrowing occurs. | Court reaffirmed the no‑borrowing rule (employers may not use contractually promised pay for one set of hours to satisfy sub‑minimum pay for another), but held Delta’s rotation‑based scheme complies because the contract promises pay by rotation/duty period and every rotation/duty period yields pay at or above the minimum. |
Key Cases Cited
- Sullivan v. Oracle Corp., 51 Cal.4th 1191 (2011) (statute‑by‑statute approach to extraterritorial application of wage laws)
- Troester v. Starbucks Corp., 5 Cal.5th 829 (2018) (de minimis rule for small amounts of off‑the‑clock work)
- Armenta v. Osmose, Inc., 135 Cal.App.4th 314 (2005) (endorsing rule prohibiting borrowing promised wages to satisfy minimum wage shortfalls)
- Gonzalez v. Downtown LA Motors, LP, 215 Cal.App.4th 36 (2013) (applied no‑borrowing rule to piece‑rate scheme with unpaid wait time)
- Bluford v. Safeway Inc., 216 Cal.App.4th 864 (2013) (applied Armenta principles to CBA context)
- Vaquero v. Stoneledge Furniture, LLC, 9 Cal.App.5th 98 (2017) (no‑borrowing applied where commission scheme did not separately pay for rest breaks)
- Kearney v. Salomon Smith Barney, Inc., 39 Cal.4th 95 (2006) (states may apply local law to businesses that choose to do business in the state)
- Kerr’s Catering Service v. Department of Industrial Relations, 57 Cal.2d 319 (1962) (policy favoring prompt and complete wage payments)